Annual Media Conference Financial Year

Transcription

1 Annual Media Conference Financial Year Page 1

2 Programme for Annual Media Conference 9.30 a.m. Review of 2016/17 financial year Andrew Walo Outlook for 2017/18 financial year Andrew Walo a.m. Financials for 2016/17 financial year Martin Schwab a.m. Summary Andrew Walo a.m. Questions a.m. End of Annual Media Conference Individual interviews possible Page 2 Annual Media Conference

3 Annual Media Conference Financial Year Andrew Walo, CEO of Axpo Holding AG Page 3

4 Key points Operating performance Good operating performance, pleasing net profit Profits from Europe, problems with Swiss production Market Increase in income from sources not dependent on the power price Rising prices and better EUR/CHF exchange rate expected from 2020 onwards Continued focus on optimisation of core business and costs Income from power will fall until 2018/19 due to lower level of hedging of power prices and euro Politics General conditions unclear, Swiss production remains under pressure Page 4 Annual Media Conference

5 Business results for 2016/17 Good operating performance strategy taking effect EBITDA EBIT Result for the period Net financial assets/ liabilities in CHF million +921 in CHF million in CHF million in CHF million FY 15/16 FY 16/17 FY 15/16 FY 16/17 FY 15/16 FY 16/17 FY 15/16 FY 16/17 Page 5 Annual Media Conference

6 Strategy taking effect Continued focus on cash flow and increasing value Optimise core business Reduce costs Make targeted investments Develop new areas of business Page 6 Annual Media Conference

7 Optimise core business Major projects Beznau nuclear power plant Unit 1 Leibstadt nuclear power plant Fuel rods Limmern pumped-storage power plant Scheduled to restart in February 2018 ENSI is examining the safety cases Idle for six months, reduced operation no further local dryouts detected affecting cladding tubes on the fuel rods Downtime in Nov/Dec 17 due to fuel rods that did not comply with the specifications Fourth machine group taken over from manufacturer Ongoing investigations into solar panelling of the dam wall Access to south German market unclear Page 7 Annual Media Conference

8 Optimise core business Profitability of hydro power plants Capital costs Interest Depreciation and amortisation 40% 25% Operating expenses Personnel Materials Third-party supplies Hydro portfolio Axpo in CHF million % Levies Water rates Taxes Costs Income Missing «Missing money* Money»* Page 8 *excl. Limmern pumped-storage power plant Annual Media Conference

9 Optimise core business Volkswind Total completed accumulated capacity from Volkswind in MW 6 wind farms completed in 2017 A total of 60 wind farms already built 35 turbines with 88 MW capacity By way of comparison: there are currently 37 wind turbines in Switzerland Total capacity > 700 MW* Pipeline MW Expertise in wind energy Axpo covers the whole value chain, from planning, construction and operation through to sales and marketing 20 0 FY 14/15 FY 15/16 FY 16/17 Page 9 * incl. installation prior to Axpo takeover Annual Media Conference

10 Optimise core business Optimisation of portfolio Sale of 5% stake in Rheinkraftwerk Albbruck Dogern (RADAG) to AEW Sale of 35% stake in Argessa AG to Energie Service Biel Sale of 50% stake in Lizerne et Morge SA (LMSA) to a Swiss consortium of buyers Sale of Schloss Böttstein (Canton of Aargau) to a private individual (Zurich) Sale of 25% stake* in Elektrizitätswerk des Kantons Schaffhausen (EKS) Page 10 * effective in FY 2017/18 Annual Media Conference

11 Reduce costs Cost savings target of CHF 200 million exceeded in CHF million Cutting operating and maintenance costs Implementing IT strategy Centralising purchasing operations Total of over 200 savings projects implemented Further savings of CHF 35 million will be achieved in FY 13/14 FY 14/15 FY 15/16 FY 16/17 Achieved FY 2013/14, 2014/15, 2015/16 Achieved FY 2016/17 Degree of ambition Page 11 Annual Media Conference

12 Make targeted investments Still only investing in safety and in profitable projects in CHF million FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Page 12 Annual Media Conference

13 Develop new areas of business Portfolio not dependent on the power price Avectris Smart energy Elblox Successful implementation of new strategy New cross-industry customers in IT infrastructure, networks, security innovative, single-source energy solutions (solar power plants, battery storage devices, heat pumps, e-mobility) of CKW Blockchain pilot project for personalised power from the neighbourhood Customers of Wuppertaler Stadtwerke (WSW) can assemble their own power mix digitally for the 2018 delivery year Page 13 Annual Media Conference

14 Develop new areas of business Portfolio not dependent on the power price Data Communications & Systems Axpo is transferring its data communications business to WZ- Systems AG. New name: Axpo WZ Systems AG Aim: flexible solutions for crisis-proof language and data communication Engineering Planning and delivery of grid infrastructure projects including assembly Operation & Maintenance Operation and maintenance of grid infrastructures Page 14 Annual Media Conference

15 Axpo successful abroad Page 15

16 Axpo successful abroad Presence in 32 locations in 27 countries Expansion of international customer business (2017: Lisbon, Amsterdam) Fourth largest sales company in Italy Leading marketer of renewable energy in Europe (approx MW) Most important marketer of wind power in Spain Named Europe s best power trader Page 16 Annual Media Conference

17 Axpo successful abroad Business Area Trading & Sales a steady source of income Gross margin and earnings before interest and tax in EUR million (performance view) Regions Share in customer business Customer groups Share in customer business Gross margin Earnings before interest and tax (EBIT) % 25% 38% 16% 2% % 26% Italy 18% SMEs Producers 18% Nordics Renewable energies 135 Spain Western and Eastern Europe Energy supply companies Industrial customers FY 14/15 FY 15/16 FY 16/17 FY 14/15 FY 15/16 FY 16/17 International business as a stable source of income Diversification by region and in customer base Page 17 Annual Media Conference

18 Axpo successful abroad Marketing of a large portfolio of renewable energies Axpo manages wind energy, photovoltaics, biomass and hydro power Axpo markets a large portfolio of producers of renewable energy, approx MW (40 TWh/a) In Spain, Axpo manages one of the biggest portfolios of producers of renewable energy, approx MW Purchase contracts with medium to long terms Purchase contracts for spot market Page 18 Annual Media Conference

19 Axpo successful abroad Sustained growth in delivery of power to customers Delivery to customers (power) in TWh +63% ~ 69.0 USA UK ~ 56.5 Nordics, Baltic states Eastern Europe Germany, Austria ~ 39.6 ~ 42.2 ~ 45.1 Benelux, France Spain, Portugal Italy Switzerland FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Page 19 Annual Media Conference

20 Axpo successful abroad Substantial gas deliveries to customers Gas deliveries to customers in TWh +145% ~ 43.2 UK Nordics, Baltic states Eastern Europe Germany, Austria Benelux, France Spain, Portugal Italy Switzerland ~ 17.6 ~ 24.6 FY 14/15 FY 15/16 FY 16/17 Page 20 Annual Media Conference

21 Axpo successful abroad Share in customer business on the Spanish and Italian power markets Italy Power Volume GWh Share 1 Enel % 2 Edison % 3 Eni % 4 Axpo Italia % 5 Gala % 6 Hera % 7 E.On % 8 Metaenergia % 9 Sorgenia % 10 A2A % 11 Acea % 12 Iren % 13 C.V.A % 14 Energetic Source % Spain Power Volume GWh Share 1 Endesa Energía, S.A.U % 2 Iberdrola Generacion España, S. A % 3 Gas Natural Sdg, S.A % 4 Hidroeléctrica Del Cantábrico, S.A.U % 5 Energya Vm Gestion De Energía, S.L % 6 Acciona Green Energy Developments, S.L % 7 Viesgo Generación S.L % 8 Axpo Iberia S.L.U % 9 Nexus Energia, S.A % 10 Fenie Energia % 11 Engie España, S.L.U % 12 Audax Energia S.A % 13 Factor Energia, S.A % Page 21 Annual Media Conference

22 Axpo successful in Europe Retail business: ambitious expansion plans between now and 2021 Increase in delivery points for power and gas in the SME segment from approx to approx Italy (including domestic customers) from approx to Spain & Portugal Poland from approx to from approx to White label strategy in partnership with Coop in Italy Page 22 Annual Media Conference

23 Outlook Financial Year 2017/18 Page 23

24 Outlook FY 2017/18 Power price trend in EUR/MWh Germany Switzerland France Italy Nord Pool +80% Baseload Germany Page 24 Annual Media Conference

25 Outlook FY 2017/18 Hedging strategy for power price HF/MWh in CHF/MWh in TWh 25 TWh Power prices hedged up to three years in advance Assuming an average production volume of 24 TWh, a change of +/- 1 EUR/MWh in the power price impacts Axpo to the tune of EUR +/-24 million 0 GJ GJ GJ GJ GJ GJ GJ GJ GJ FY 2011/12 11/12 FY 2012/13 12/13 FY 2013/14 13/14 FY 2014/15 14/15 FY 2015/16 15/16 FY 2016/17 16/17 FY 17/18 FY 18/19 FY 19/ / / /20 Durchschnittliche Produktionsmenge Strompreisabsicherungen Marktpreise 0 Average production volume Power price hedging Market prices Page 25 Annual Media Conference

26 Operating performance FY 2017/18 Lower hedging prices erode value of production Value of production excluding CKW Volume based on FY 14/15 in CHF million FY 14/15 FY 15/16 FY 16/17 FY 17/18 Page 26 Annual Media Conference

27 Outlook FY 2017/18 Political parameters SFOE not adopting power market model Opening up of power market, EU agreement Winter problem not resolved No investments in hydro power Water rates: Federal Council backpedalling Need for reduction and greater flexibility Energy Strategy 2050 not feasible without expanding hydro power Trend in water rates vs. market price % -50% Energy price in CHF/MWh Water rates in CHF/KW Page 27 Annual Media Conference

28 Outlook FY 2017/18 «Solutions» project: increase in capital postponed Finding a solution using our own resources Being ready for future challenges without additional capital Preparing the ground internally for a potential increase in capital Market environment Deterioration of market environment * Increase in capital Page 28 * if necessary, the Group will be capable of undertaking an increase in capital within 12 months of a decision to that effect Annual Media Conference

29 Outlook FY 2017/18 «Solutions» project: restructuring in 2018 CKW and other investments Hydro AG Axpo Power AG Axpo Holding AG 100% 100% Grid AG Axpo Solutions AG (formerly Axpo Trading AG) Renewables abroad International customer business Asset marketing Energy trading Hydro power plants and Grids will each be grouped in a joint stock company Axpo Trading AG, covering renewable energies abroad, the customer business and asset utilisation, will form the backbone of the new Solutions AG Option: Hydro AG/Grid AG can be sold to «Solutions» if necessary Page 29 Annual Media Conference

30 Outlook FY 2017/18 International business: where Axpo wants to grow Retail business Western Europe LNG (liquefied natural gas) USA Stepping up the expansion of delivery points in the retail business in Italy, Spain, Portugal and Poland Optimisation of sales channels through the use of digital media/digital innovation Increase gas and power deliveries by over 10% Push up the marketing volume of renewable energy by over 40% Greater demand for renewable energy and for risk management solutions will open up new opportunities Increase in LNG imports to national markets in Europe Expansion of global presence Closer partnerships with new and existing LNG market players (chiefly Asia) Expansion of product range to include structured and bespoke customer solutions Gradual geographic expansion of activities in the USA Page 30 Annual Media Conference

31 Annual Media Conference Financial Year Martin Schwab CFO Axpo Holding AG Page 31

32 Income statement Total income in CHF million EBIT in CHF million 269 Result for the period in CHF million FY 15/16 FY 16/17 FY 15/16 FY 16/17 FY 15/16 FY 16/17 Lower power prices at our own power plants have eroded total income and EBIT by CHF 270 million Higher power prices in Italy and greater power revenue abroad Swissgrid compensation for compulsory purchase of CHF 139 million Sustainable, recurring cost savings in excess of the CHF 200 million target Impairments low at CHF 61 million due to rising power prices (PY CHF 1.6 billion) Financial result improved by CHF 150 million thanks to securities portfolio restructuring No dividend to be distributed Page 32 Annual Media Conference

33 One-offs FY 15/16 FY 16/17 Change in CHF million as presented One-offs normalised as presented One-offs normalised normalised Total income Energy procurement, grid usage and goods purchased Materials and third-party supplies Personnel expenses Other operating expenses Share of profit of partner plants and other associates EBITDA Depreciation, amortisation und impairments EBIT Compensation for compulsory purchase by Swissgrid of CHF 139 million, additional interest payments of CHF 24 million in the financial result Impairments of power plants and energy supply contracts at CHF 61 million (previous year CHF 1.6 billion) Page 33 Annual Media Conference

34 Income statement excluding one-offs in CHF million Normalised EBIT FY 15/16 FX Lower power prices Lower power volume Impairment effects Improvements in result Trading business Wind farm sales Lower WACC Grids Other Normalised EBIT FY 16/17 Power price and volume effects push EBIT down by CHF 400 million compared with previous year Page 34 Annual Media Conference

35 EBIT excluding one-offs by segment Business Area Assets in CHF million CKW in CHF million FY 15/16 FY 16/17 FY 15/16 FY 16/17 Lower power prices and lower production from hydro power plants having a significant negative impact on the result Lower regulatory interest payments for grids Lack of margin on sales of wind farms in previous year Lower market prices are being offset by the good result from energy and system services Lower regulatory interest payments for grids Higher provisions due to ongoing regulatory proceedings Page 35 Annual Media Conference

36 EBIT excluding one-offs by segment Business Area Trading & Sales in CHF million in CHF million FY 15/16 FY 16/17 EBIT excluding one-offs One-offs EBIT as presented Foreign currency effects Hedging effects FY 15/16 FY 16/17 Unhedged energy 86 EBIT (adjusted) Better margin from energy trading and origination business in Europe Positive deferred income from previous year Stronger euro around the end of the financial year cut over CHF 150 million off EBIT Results reported by Trading & Sales significantly distorted by foreign currency and hedging effects Page 36 Annual Media Conference

37 Cash flow from operating activities in CHF million Actual FY 15/16 Swissgrid: compensation for compulsory purchase FX Lower power prices Lower power volume (especially KKL) No wind projects sold Effect on balance sheet/return STENFO KKG/KKL Change in NWC Improvements in results Other Actual FY 16/17 Power price and volume effects push cash flow from operating activities down by CHF 400 million compared with previous year Postponed sale of wind farms has reduced operating cash flow by CHF 126 million Page 37 Annual Media Conference

38 Investments in CHF million FY 15/16 FY 16/17 Change Hydro energy Nuclear energy Grid New energies Declining hydro investments due to completion of Limmern pumpedstorage power plant No more fund contributions by Beznau nuclear power plant required since * New energies included the acquisition of Volkswind in the previous year Other Net investments Page 38 * based on provisional cost study for 2016 Annual Media Conference

39 Free cash flow in CHF million Lower investments more than offset lower cash flow from operating activities Lost cash flow due to delayed wind farm sales made up by Swissgrid compensation for compulsory purchase FY 15/16 FY 16/17 Cash flow from operating activities Net investments Free cash flow Page 39 Annual Media Conference

40 Balance sheet in CHF million Stable and robust balance sheet ratios Total assets up slightly year on year to CHF 19 billion Equity ratio increased to 25.7% (previous year: 24.9%) Non-current assets Current assets Assets Liabilities Assets Liabilities Cash and cash equivalents Equity Non-current liabilities Current liabilities Page 40 Annual Media Conference

41 Net financial assets in CHF million Positive trend on capital markets has added more than CHF 50 million to the value of the securities portfolio Financial liabilities totalling around CHF 100 million repaid Stable net financial assets Financial liabilities Cash, time deposits, financial assets Net financial assets Page 41 Annual Media Conference

42 Number of employees Full-time equivalents Project progress Limmern pumped-storage power plant Efficiency savings and downsizing Trading & Sales: growth initiatives Expanding capacity at Volkswind Reduction in headcount in the Business Area Assets and in Building Technology at CKW Increased staffing levels in the growth markets of Spain and the USA and expansion of activities at Volkswind Page 42 Annual Media Conference

43 Outlook in general Higher power prices expected in the long term (short-term fluctuations possible) Systematic focus on cost-cutting measures, optimising core business and continuing to develop new, profitable sources of income Improved general environment for hydro power plants Safeguarding sustained profitability, liquidity and access to the capital markets is Axpo s primary strategic objective Page 43 Annual Media Conference

44 Annual Media Conference Summary Andrew Walo, CEO of Axpo Holding AG Page 44

45 Strategy taking effect Improved outlook for prices Operating performance Power prices and income Political parameters Further improve operating performance Expand portfolio not dependent on the power price Bottoming-out expected in 2017/18 and 2018/19 due to price and euro hedges for up to three years in advance. From 2020, rising trend in power revenue thanks to better prices and euro exchange rates. General conditions for Swiss power producers remain challenging Need for politicians to exert their influence as part of the energy strategy Page 45 Annual Media Conference

46 Annual Media Conference Questions Page 46